[UK Blog] 3 Forces Shaping Global Retail During COVID-19

On Monday night, during his evening address, British Prime Minister Boris Johnson put in place the UK’s strictest measures to date — the closest to a lockdown the country has seen. In addition to urging people to stay in their homes other than to buy essential food or medicines and exercise once a day, the government announced all “non-essential” shops are to close for at least three weeks — potentially longer — while they analyse impact.

It’s a challenging time for retailers across the globe. Those with multichannel operations in place are at an advantage. For many retailers, the shift to online will be accelerated. McKinsey predicts: “The online world of contactless commerce could be bolstered in ways that reshape consumer behavior forever.” And we are unlikely to ever go back to pre-outbreak norms of shopping preference.

If we look historically, this was certainly the case in China during the 2003 Sars pandemic. JD.com founder Richard Liu had a small chain of electricals stores at the time of the outbreak. But as more shoppers shied away from physical shopping, he began to transition the company online. Pretty incredible to think that today, JD is a Fortune 500 business that generated sales last year of $67.2bn.

The Sars pandemic may have also played a role in growing the Alibaba B2B platform, which began as a means for Chinese traders to buy and sell goods — Alibaba’s Singles Day shopping extravaganza is now the largest in the world, generating over $1bn in sales in their first minute.

So what does this mean for brands and retailers? Here are three areas we believe you should be considering during these challenging times, taking inspiration from retailers around the world to connect with your customers.

Move to Marketplaces

If we look at the lessons learned in China, we could experience a surge in marketplaces, both increased sales and new sellers on existing platforms and the emergence of new marketplaces. For brands and retailers without a strong online presence, it might be too steep a hill to climb to expect them to build these from scratch. Instead, we might see more of these companies opting to sell on existing marketplaces, even those who have been reticent to do so before.

In some cases, it’s already begun. On 10 March, IKEA announced they would be partnering with Alibaba to open their first virtual IKEA store on Tmall focused on improving and supporting Chinese customers to live a better life at home. This is the first time IKEA has partnered with a third party to sell their items. So far, the results have been promising. Their initial live-streaming session attracted 27,000 viewers within the first 10 minutes, peaking at 300,000 viewers.

With stores like Ulta and Sephora temporarily closing their doors in the US, it’s anticipated even more beauty brands will make the move to Amazon, as well as doubling down on their own websites. Interestingly, many beauty and personal-care products are categorised as “essential” with the new stipulations on Amazon warehousing, presenting a clear opportunity to take advantage of Amazon’s selling clout. Many beauty brands might start to transition their product catalogue across to Amazon to meet consumer demand.

Marketplace diversification has always been a strong e-commerce strategy, however now more than ever it’s crucial in order to capture wallet share. For those brands or retailers who sell on one marketplace only, and that marketplace has issues, these companies risk losing shoppers who go to another marketplace to complete their purchase. Brands and retailers should be spreading their listings across several marketplaces to ensure they can meet customer demand. (For advice on which marketplaces would be the best fit for your business, get in touch with our expert team). Similarly, for those selling on marketplaces (or their own websites), it’s important to have diversified fulfillment operations to ensure that orders can continue shipping.

Empathy Selling

We’re used to thinking about social selling. But during this period are we experiencing the emergence of a new trend: empathy selling? Customers want to know that brands and retailers are taking an ethical stance during these worrying times and many retailers are responding with acts of generosity.

Hotel Chocolat has offered all NHS staff in the UK a 50% discount for the duration of the crisis, which their CEO Angus Thirwell says has been “immensely well received and taken up”.

In Italy, which has been under lockdown since 9 March, supermarket chain Carrefour said online customers had doubled to 110,000. They have collaborated with a logistics start-up to deliver essential items in 30 minutes or less in Italian cities to those at risk.

UK Footwear retailer Kurt Geiger has launched two new initiatives. Small Acts of Kindness has been trending on its social media channels, with store managers donating £100 gift cards to 55 NHS critical care workers in each of their local hospitals. And since closing their 55 stores, management at Kurt Geiger have encouraged their 2,000 workers to use their paid leave to volunteer with Age UK. Their Chief Executive Neil Clifford is reported as saying “It’s clear that community life and extra acts of kindness will help build invaluable support in this unprecedented time, particularly for the vulnerable and isolated.

Build Digital Communities

As we enter the lockdown period, more and more of us will be seeking inspiration and with time on our hands looking to social media and digital entertainment. In China we’ve already seen retail and entertainment merge through their usage of live streams on Taobao, which generates more than 150,000 hours of video content every day. Leading fashion brands have begun to live-stream significant shows and new line launches to continue to build their online communities, using platforms like WeChat and Weibo.

Brands like MaxMara used WeChat to share information and images of items and products that it thought would benefit its customers while they were in lockdown.

John Lewis have announced a series of new initiatives designed to address loneliness for those in self-isolation. The department store is exploring digital services, such as offering online sessions which could include wellbeing, craft and cookery classes, as well as advice for expectant parents provided by experts.

It’s clear these are unprecedented times for the retail community yet even amidst these challenges, there are opportunities for retailers and brands to continue to connect with their customers and meet their needs at a time when it really counts.